The Office of General Counsel issued the following informal opinion on
March 21, 2001, representing the position of the New York State Insurance Department.

Re: Interpretation of Regulation 169

Questions Presented:

1. May the privacy notices given by an insurer to a consumer or
customer relieve the insurance broker from the obligation to give the privacy notices?

2. Is there a contradiction between example (c) and example (e) of
"no continuing relationship"?

Conclusion:

1. An insurance broker may rely on the privacy notice of the insurer
only if the broker has binding authority and it does not disclose any nonpublic personal
information to any person other than the insurer.

2. Examples (c) and (e) are not contradictory, but rather represent
possible different circumstances.

Facts:

(2)(i) A licensee is not subject to the notice and opt out requirements
for nonpublic personal financial information set forth in sections 420.4 through 420.9 of
this Part if the licensee is an employee, agent, sublicensee, or other representative of
another licensee ("the principal") and:

(a) The principal otherwise complies with, and provides the
notices required by, the provisions of this Part; and

(b) The licensee does not disclose any nonpublic personal
information of a consumer or customer to any person other than the principal from or
through which such consumer or customer seeks to obtain or has obtained a product or
service, or its affiliates in a manner permitted by this Part. (N.Y. Comp. Codes R. &
Regs. tit. 11 § 420.3(p)(2)(i) (2000)).

Generally speaking, an insurance broker is a representative of the
insured, not the insurer. Hence, an insurance broker will usually not fall within the
exception. However, where the insurance broker has binding authority for an insurer, it is
a representative of the insurer, and hence no separate notice is required, provided that
the other conditions specified in paragraph (2) are satisfied. (N.Y. Comp. Codes R. &
Regs. tit. 11 § 420.3(p)(2)(ii) (2000)).

N.Y. Comp. Codes R. & Regs. tit. 11 § 420.3(i) (2000) requires a
"continuing relationship" as part of the definition of "customer
relationship", then provides examples of what is and what is not a continuing
relationship. The following are two examples of what is not a continuing relationship:

(c) The individual is no longer a current policyholder of an
insurance product or no longer obtains insurance services with or through the licensee;

(e) The customers policy is lapsed, expired, or otherwise
inactive or dormant under the licensees business practices, and the licensee has not
communicated with the customer about the relationship for a period of 12 consecutive
months, other than annual privacy notices, material required by law or regulation,
communication at the direction of a state or federal authority, or promotional materials;
(clauses (c) and (e) of N.Y. Comp. Codes R. & Regs. tit. 11 §
420.3(i)(2)(ii)(d) (2000).

While there is some overlap between the two clauses (and hence a
continuing relationship would not exist under either of the clauses), there are certain
circumstances in which only one of the provisions would apply. For example, unlike life
insurance policies, property/casualty policies do not lapse and certain statutory
provisions often preclude them from expiring without a nonrenewal or cancellation notice.
In addition, a fully paid-up life insurance policy would be considered to be inactive or
dormant, but the consumer remains a current policyholder.

For further information, you may contact Supervising Attorney Paul A.
Zuckerman at the New York City Office.